Wall Street Journal editorial on the public-private pay differential in Europe, drawing on an ECB paper also discussed on the Irish Economy blog --
Despite all this, the public-private wage gap in Europe wasn't always so large, and really began to widen after 1999. That has at least something to do with the introduction of the euro, which allowed employees to compare their pay with peers in other countries. One result was that government workers in particular were able to negotiate better contracts.
It's an interesting point, but the big wave of Irish public sector pay increases didn't spring from comparisons with other European countries. It sprang from alleged comparisons within Ireland. And these comparisons, post-1999, themselves reflected the damaging effect of the convergence of interest rates due to the Euro: house prices were increasing rapidly, leaving public sector workers feeling priced out, and the anecdotal accounts of big money being made in real estate and banking -- in an easily dazzled media -- were growing. Add to that the relative power of public sector unions in Ireland, and you have a story. The epigraph could come from comparing the resulting pay scales with those in other Eurozone countries.
Despite all this, the public-private wage gap in Europe wasn't always so large, and really began to widen after 1999. That has at least something to do with the introduction of the euro, which allowed employees to compare their pay with peers in other countries. One result was that government workers in particular were able to negotiate better contracts.
It's an interesting point, but the big wave of Irish public sector pay increases didn't spring from comparisons with other European countries. It sprang from alleged comparisons within Ireland. And these comparisons, post-1999, themselves reflected the damaging effect of the convergence of interest rates due to the Euro: house prices were increasing rapidly, leaving public sector workers feeling priced out, and the anecdotal accounts of big money being made in real estate and banking -- in an easily dazzled media -- were growing. Add to that the relative power of public sector unions in Ireland, and you have a story. The epigraph could come from comparing the resulting pay scales with those in other Eurozone countries.
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